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China's Fiscal System: A Work in Progress (2005)

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We argue in this paper that unless China begins to tackle more systematically the serious problems that have emerged in the finances of its various levels of sub-national government the problems to which the present unsatisfactory system give rise will over time increasingly distort resource allocation, increase distributional tensions, and slow down the impressive recent growth of the Chinese economy. Despite the lack of solid and reliable information on the size and nature of China’s real fiscal system, we show that the evidence available is generally consistent with this pessimistic reading. China’s fiscal and – in time – economic future thus rests to some extent on reforms to key aspects of its fiscal system, especially its intergovernmental finances. Moreover, a more consistent and purposive framework to this complex of problems seems needed. Given the scale and scope of China’s underlying public finance problems, the ‘reactive gradualism’ evidenced in recent ad hoc reforms to this or that piece of the fiscal system has, we suggest, run its course.

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  • Richard Bird & Christine C.P.Wong, 2005. "China's Fiscal System: A Work in Progress (2005)," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper0520, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
  • Handle: RePEc:ays:ispwps:paper0520
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    File URL: http://icepp.gsu.edu/files/2017/09/ispwp-0520.pdf
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    References listed on IDEAS

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    1. Zhihua Zhang & Jorge Martinez-Vazquez, 2003. "The System of Equalization Transfers in China," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper0312, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
    2. Zhou, Huizhong, 2000. "Fiscal decentralization and the development of the tobacco industry in China," China Economic Review, Elsevier, vol. 11(2), pages 114-133, December.
    3. Bubnova, N. & Way, L., 1998. "Trends in Financing Regional Expenditures in Transition Economies. The Case of Ukraine," World Bank - Discussion Papers 378, World Bank.
    4. Richard M. bird, 2003. "Taxation in Latin America: Reflections on Sustainability and the Balance between Equity and Efficiency," International Tax Program Papers 0306, International Tax Program, Institute for International Business, Joseph L. Rotman School of Management, University of Toronto.
    5. Roy Bahl & Jorge Martinez-Vazquez, 2003. "Fiscal Federalism and Economic Reform in China," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper0313, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
    6. Richard Bird & Joosung Jun, 2005. "Earmarking in Theory and Korean Practice (2005)," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper0515, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
    7. Wong, Christine P. W. (ed.), 1997. "Financing Local Government in the People's Republic of China," OUP Catalogue, Oxford University Press, number 9780195900279.
    8. International Monetary Fund, 2004. "Toward More Effective Redistribution; Reform Options for Intergovernmental Transfers in China," IMF Working Papers 04/98, International Monetary Fund.
    9. Raju J Singh & Ben Lockwood & Ehtisham Ahmad, 2004. "Taxation Reforms and Changes in Revenue Assignments in China," IMF Working Papers 04/125, International Monetary Fund.
    10. Richard M Bird & Joosung Jun, 2005. "Earmarking in Theory and Korean Practice," International Tax Program Papers 0513, International Tax Program, Institute for International Business, Joseph L. Rotman School of Management, University of Toronto.
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    Cited by:

    1. Elliott Parker & Judith Thornton, 2007. "Fiscal Centralisation and Decentralisation in Russia and China," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 49(4), pages 514-542, December.
    2. Petra Persson & Ekaterina Zhuravskaya, 2016. "The Limits Of Career Concerns In Federalism: Evidence From China," Journal of the European Economic Association, European Economic Association, vol. 14(2), pages 338-374, April.
    3. Yu Zheng & Raul Santaeulalia, 2016. "The Price of Growth: Consumption Insurance in China 1989-2009," 2016 Meeting Papers 826, Society for Economic Dynamics.
    4. Li, Lixing, 2011. "The incentive role of creating "cities" in China," China Economic Review, Elsevier, vol. 22(1), pages 172-181, March.
    5. Richard M. Bird, 2006. "Taxing Land and Property in Emerging Economies: Raising Revenue...and More?," International Tax Program Papers 0605, International Tax Program, Institute for International Business, Joseph L. Rotman School of Management, University of Toronto.
    6. Das-Gupta, Arindam, 2014. "Fiscal Resources for Inclusive Growth," ADB Economics Working Paper Series 416, Asian Development Bank.

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    Keywords

    Chima. Sun-national government; Fiscal system; China's fiscal system;

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